I have shorted SBUX last June at 30 1/16. Ever since then, I have seen it rise as high as $44.00 and luckily it came back down so my losses have been cut. The last sales report indicated a "slowing down" - and SBUX has earnings due around 1/22/1997, according to Yahoo research.
Does anyone have some opinions on what this earnings report might bring - disappointment or sweet surprise? Frankly, I am tired of my short position, so I am pondering whether I should cover now and get it over with or give it one last chance till they report their earnings.
From Yahoo research, I see that earnings on SBUX come out on 1/22/1998 (approximate). If people were expecting exceptional earnings - it seems like the stock would start inching higher. But its off nearly $1 today.
Also - Monday 1/19/1998 is a holiday so there are not many trading days left before their announcement.
Do you really think there will be an "exceptional" surprise?
Keep your short position. Cover only on intraday sell offs. Short sellers are trading their positions because of the investors will bid up this stock on their HOPES for the future, no matter how long that future may be. These investors site KO and MCD as comparable companies to SBUX. Hopefully, for their sake they are correct, but SBUX is not KO nor MCD and premium coffee is not soda nor burgers.
If the market rises, SBUX will not partcipate on a relative basis. Investors should be questioning the earnings outlook for 1Q98 due to the weak revenue increases in the same period. If the market falls, SBUX will fall along with it but will be supported by some short covering. Investors believe the support looks good for SBUX when such support may be due to high levels of short interest in the stock and not long-term investors.
Best chances for an earnings disappointment should be 2Q98.
You can trade either way on SBUX but I prefer the short position.
What was your reasons to short in the first place??? If your reason was so-called valuations, well...sorry about your poor research. Dont short a growing revenue company, that includes YHOO and AOL. If you had been to any stores and see caffeine addicts coming in and out, how can you short this cash cow??? Hating the coffee is a better reason to short.
Didnt you get a chance to cover at 30-32 a while ago??? SBUX has been a short favorite and I dig that. Shorts give a cushion if stock plummets, and an additional boost if stock rallies.